Compounding in your life

Compounding in your life

Your actions affect other areas of your life. Figure out what changes you want to make in your life and what actions you’ll need to make to get there.  

A big reason why I talk about both health and money is because both are powerful drivers for every area of your life, improving one aspect of your life helps all the other areas improve too. A rising tide (of intentional improvement) lifts all boats (in your life). Much like your body is a complete organism with various systems that all influence each other, so it is with all the various aspects of your life. A choice you make in one area of your life has ripples throughout your entire life.

Albert Einstein called the power of compound interest the 8th wonder of the world. When you look at a graph of the growth that you get with compound interest it is truly amazing. This is why you should save regularly, invest what you save, and start saving today.

Look at this. In all 3 cases you started with $1,000 and the only thing that changed was how it was used. Bank account, high interest savings account, well invested. The difference after 20 years is huge and as time goes on the bigger the gains from compounding are.

A similar graph can be found for the results of Kaizen or the concept of continuous improvement, getting better in a specific way every day. See how similar it is to the first graph?

As a side note, one of the more encouraging parts of this graph to me is what happens if you get worse every day. You’re moving in the wrong direction yes but things can only get so bad. The effects of bad performance can only go so low. It’s encouraging that no matter where you are right now, the path up isn’t out of reach. 

The second encouraging thing is that once you start improving every day the upside is limited only by you and how far you want to go, and the longer you work on improving, the further you go.

Stepping back. Expanding compounding.

Both of these graphs show the effects of compounding. Money is an easy way to conceptualize the power of compounding because there are numbers associated with it but it extends far beyond money. The same compounding effect applies in so many other areas of life including relationships, skills, health, etc. If want you to be able to take advantage of this in as many areas of life as possible you need to be intentional about what you do each day. 

To be intentional with your day to day actions, you need to know where you want them to lead you. You need to have a plan. 

Say for example you want to improve your relationship and you want to start by being a great spouse. Define what that means to you and it might be a good idea to get some input from your spouse. Once it’s defined, you’ll be able to break down what you need to do each day or week to make progress and continue to your goals. 

Just like the compound interest graph and the 1% better graph from James Clear, the compound curve starts out gradual but quickly the slope increases. When you start the journey of improving at something continually over time, progress can feel slow and you might find yourself wondering if you are doing the right things to get you where you want to be. This is why having a clear plan is important. The sooner you start, the faster you’ll get to the steep slope of the graph where the compounding starts to work it’s magic. 

Anyone who has worked on improving a skill knows that you never get better by 1% each day. Sometimes you make breakthroughs where you get better by 10% in one day, other days you don’t make any improvement at all. What matters is that you keep doing the work and showing up. By showing up and putting in the work you earn the big breakthroughs and continue progressing.

Be gracious to yourself and show up

It’s a process and like any process it can get messy and will be nonlinear. A graph of someone trying to lose weight can highlight what this looks like day to day graphically. Your weight will fluctuate day to day based on a number of factors (sodium intake, water retention, etc.) And that fluctuation can be pretty erratic but what matters is the trend. 

If you’re like most people, you probably want to improve in several areas of your life. Your health, your money, your relationships, etc. To reach the compounding effect in each of these, you will need to work to improve each of these every day. If you work to improve several areas at once there is synergistic compounding magic that happens between these areas. 

The better health you have the more energy you’ll have to be able to spend on your loved ones. The more money you have, the more you’ll be able to have time freedom for your relationships or a more nutritional diet.  The better relationships you have, you will live longer and experience much better mental health. 

You can’t have exactly 1% improvement each and every day. Some days you’ll not have any change, others you’ll have breakthroughs that jump you up 5 or even 10%. What matters is that you put in the time and effort each day to work on improving what matters to you. Just like the graph above, you’ll have good and bad days but the mix of consistent effort and commitment to each area you want to work on is what will get you the trend you’re looking for. Rome wasn’t built in a day and neither was an amazing relationship, a great body, or a nest egg. Promise yourself that when you have setbacks that you’ll keep moving forward without spending forever being discouraged.

Now what?

Knowing this and the potential that you have available to you with some planning and effort, what will you do? Many people float through life, reacting to what happens to them without any thought of what they want their life to be. You only have one shot at life. I hope you choose to make the most of it. 

What do you want to improve at? What matters to you?